New Delhi: India Inc on Friday said industrial output may look better in March but "the industry is still not out of the woods", and urgently required interest rate reduction and steps for investment revival.

CII hoped that RBI would take note of this. Even before the next review of the monetary policy, it should reduce repo rate and Cash Reserve Ratio (CRR) to ensure effective transmission of the monetary policy, he added.

Showing signs of recovery, the industrial growth bounced back to 2.5 percent in March on better performance of manufacturing and power sectors coupled with higher output of capital goods.

Industrial production had seen a contraction of 2.8 percent in March last year. Reacting on the data, Assocham said, while overall the industrial performance may look better as compared to February, 2013, "the industry is still not out of woods" as various segments in the manufacturing sector have shown de-growth.

"It is a long-haul before we see considerable growth...However, going forward from second quarter of the current fiscal the situation is expected to improve," Assocham Secretary General D S Rawat said.

The manufacturing sector, which constitutes over 75 percent of the index, grew by 3.2 percent in March as against a decline in output by 3.6 percent in the same month of 2012.

Ficci said the growth in March in manufacturing comes over a negative base and can hardly be looked as a revival in manufacturing. Overall slowdown in economic activity and consumer demand continues to constrain manufacturing growth.

Echoing the same concern, CII said the investment revival measures assume utmost priority.

"There is an urgent need to fast-track project clearances by the Cabinet Committee on Investment (CCI)," Banerjee added.